In a development little noticed by many in the international community, China is putting numerous domestic energy policies and programs in place that will result in significant progress toward reducing its greenhouse gas output from a business-as-usual scenario.

China's Major Energy Policies

Chinese decision-makers have set aggressive
domestic energy targets in a suite of domestic
policies even as China continues to seek
rapid growth to raise the standard of living to
escape its relative poverty (China’s GDP per
capita is less than one tenth of the U.S. GDP
per capita). Unveiled in June 2007, “China’s
National Climate Change Programme” linked
its energy policies as key elements of China’s
climate change mitigation efforts. This policy
has been strengthened and complemented
with additional initiatives, including a set of industry,
transportation and construction energy
conservation policies announced by Premier
Wen Jiabao in January 2009. Premier Wen
has also announced that China will be adding
greenhouse gas goals in its 12th Five Year Plan,
to begin in 2011, although no details are available
yet. To date, China has:

Adopted a 20% Reduction in National Energy Intensity By 2010

China has reduced national energy intensity
(energy use per unit GDP) in each of the
past three years: by 1.6% in 2006, 3.7% in
2007 and 4.59% in 2008.

Implemented energy efficiency programs.
The Top 1000 Energy-Consuming Enterprises
Program sets energy-saving targets
for China’s 1000 highest energy-consuming
enterprises, and was responsible for an
impressive two-thirds of China’s energy
efficiency gains in 2006 and half of these
gains in 2007.5 The program was on target
for its first year, and is on track to reach its
five-year goal in 2010.

Raised taxes on petroleum. In January
2009, China increased the tax on gasoline
from 11 cents per gallon to 55 cents per
gallon and the tax on diesel rose from 6
cents per gallon to 44 cents per gallon.

Adopted new rural vehicle fuel economy
standards. On-road, off-road, and farm
vehicles in rural areas are now covered by
Chinese fuel efficiency regulations, which
currently cover urban vehicles and average
34 mpg. Including these additional vehicle
categories more than doubles the number
of vehicles covered by the fuel economy
standard.

Put China’s energy conservation law into
effect. Implemented on April 1, 2008, all
local governments are required to increase
urban energy efficiency in buildings and
public transportation to meet the 20% energy
intensity goal. Local government plans
are now audited by the central government.
With increased local attention to this goal,
energy efficiency improvements have been
accelerating since 2006.

Required green government procurement.
In April 2009, China’s highest government
body, the State Council, mandated that governments
at all levels buy more eco-friendly
products, evaluated on the basis of energy
consumption, noise, pollution emissions,
product design, use of recycled materials
and minimization of hazardous materials.

Announced a new program in May 2009 to
provide subsides to promote green home
appliances. China’s National Development
and Reform Commission will give subsidies
that range from $44 to $125 for energy efficient air-conditioners, refrigerators, television
sets, washing machines and motors.
Cost reductions are expected to generate
$60 billion to $75 billion of consumption
demand and save 75 billion kwh of power.

Passed a National Renewable Energy Standard of 15% by 2020

Set two wind power goals in 2005---5 GW
by 2010 and 30 GW by 2020. In 2008, China
increased the 2020 goal to 100 GW. China
has consistently outpaced these goals: in
2008, China installed 7.19 GW of new wind
power; with total installed capacity reaching
13.2 GW.

Grew its solar industry. China produced
44% of the global supply of solar photovoltaic
(PV) panels in 2008 up from 35% in
2007, and 20% in 2006. Although most of
the solar PV produced in China to date has
been exported, a newly enacted subsidy of
approximately $2.80 per watt of installed
power is evidence of the Chinese government’s
commitment to developing a domestic
solar market. China already accounts
for 70% of both global production and use
of solar hot water heating systems.15

Diversified domestic energy sources.
Sources such as organic and municipal
waste and methane gas captured from coal
mining are playing increasingly important
roles in energy production in both the public
and private sectors. In 2007, the national
government added a 4 cent feed-in tariff to
encourage biomass use in power production
with a goal of reaching 30 GW of biomass-to-power by 2030. This is in addition to the
use of biomass directly in industrial boilers,
which is already in place in 1600 factories.
Moreover, over 50 Chinese cities run waste-to-energy power or district heating plants.
China’s national goal is to process 30% of
total municipal waste into energy by 2030.

Implemented coalbed and coalmine methane
extraction projects. China currently
has implemented more than 60 coalmine
methane extraction projects, including the
world’s largest coalbed methane to electricity
project in Shanxi province. The Ministry
of Environmental Protection recognizes the
value of coalmine and coalbed methane
to provide energy and to reduce methane
emissions. The International Energy Agency
projects a 40% growth in coalmine and
coalbed methane utilization in China this
year; this will result in China achieving an
absolute decrease in coal-related methane
emissions for the first time. China expects
this figure to double again by 2010, resulting
in 80% of the resource being captured.

Promoted Infrastructure for Green Development

One-third of China's stimulus package is focused on infrastructure that will promote energy efficiency.

The major elements of the stimulus package
are:

$90 billion in rail construction in 2009.
This new investment comes after considerable
upgrades over the last ten years,
including an upgrade that increased rail
shipping capacity by 18% in 2007.19 In
addition, public transportation in at least
15 major cities is being significantly
improved. For example, Beijing added
three new subway lines, a light-rail connecting
downtown and the airport, and
bus rapid transit.

Made new buildings more energy efficient
through clearer regulations and increasing
enforcement. According to recent government
statistics, 97% of new buildings in
urban areas meet efficiency codes at the
design stage and 71% at the construction
stage, up respectively from 17% and 1% in
2006.

Set goals for energy efficient lighting. The
National Development and Reform Commission
and Ministry of Finance have set
a goal for China to use an additional 150
million energy efficient lights (e.g., compact
fluorescents) by 2010. The Ministry of
Finance provides a subsidy that reduces
the wholesale cost of these lights by 33%
and the retail cost by 50%. In many areas,
citizens pay only 10% of the cost because
local governments offer an additional
subsidy of 40%.

Conclusion: China's Development Challenge

While China and the United States today emit
approximately the same amount of greenhouse
gases, it is worth noting that China’s per
capita emissions are only one-fi fth of those
of the United States.

As China and the Chinese people aspire
to economic development levels on par with
the United States, it will be critical to de-link
economic growth with greenhouse gas emissions.
The decarbonization of China’s economy
is beginning with the steps taken in policy
today. The United States and China together
must move beyond conventional coal to meet
economic aspirations and develop global greenhouse
gas stabilization goals.

WRI and Climate Policy in China

The World Resources Institute (WRI) is drawing
upon the institute’s technical expertise, research,
analytical tools and history of effective
private sector convening to help the Chinese
government succeed in meeting its energy and
climate goals.

Relevant WRI programs and projects include:

A joint research program in Beijing with
the Tsinghua University Low Carbon Energy
Laboratory with major projects focused on
carbon capture and storage, and elements
of a potential international agreement,
including both measuring and reporting
issues and technology.

In May 2009, WRI established the China
Climate and Energy Information Network
with the support of the Energy Foundation, to
develop better information tools for policymakers
in the United States to understand
China’s climate and energy policies and data.

The GHG Protocol Initiative is a partnership
of businesses, NGOs, governments
and academics convened by WRI and World
Business Council on Sustainable Development.
The GHG Protocol Corporate Accounting
and Reporting Standard has emerged as
the pre-eminent international standard for
preparing a corporate-wide GHG emissions
inventory. Last year the protocol team began
developing GHG standards and programs in
China focused on the country’s most energy
intensive sectors---power, cement, steel
and petroleum.

The Green Power Market Development Group
is working with Jiangsu Province to promote
the domestic renewable market and led off
with a program on promoting solar power in
Nanjing in April 2009.

WRI’s [New Ventures China](http://www.newventures.
org) project promotes
sustainable growth by accelerating the
transfer of capital to small and medium
enterprises that deliver social and environmental
benefi ts. Since 2004, NV China has
mentored 40 companies that have since
received a combined total of $70 million in
equity and debt financing.